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ISET Economist Blog

A blog about economics in the South Caucasus.
Dec
06

The Georgian Tax Lottery Experiment after Seven Years

More than three decades ago economists famously concluded that tax compliance is rather irrational behavior. Literature, across a wide range of disciplines, has since been overflowing with analysis as to why we see so much tax compliance in the modern world. The academic literature is concerned with why people pay so much tax or why so many people pay taxes, therefore policy-makers can gain an understanding of the underlying mechanisms, which thus allows them to design appropriate policy actions to boost revenue efforts. Income generated from tax collect...
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Dec
03

Inclusive and Sustainable Development of The Mountainous Regions: Myth or Reality?

  Mountains cover 54% of Georgia’s territory. People living in those areas represent the most vulnerable group of Georgian society. Land erosion and climate change are prevalent in the mountains; unsustainable use of natural resources (forests in particular) and limited access to infrastructure pose significant risks to the lives of people there. In order to ensure the inclusive and sustainable development of the mountainous regions, the Georgian Government adopted the Law on the Development of Mountainous Regions in 2015. A bit later, in 2018, the ...
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Oct
11

The Warning Bells are Ringing: A Difficult Summer Season for the Georgian Electricity Market

Historically, the main concern in monitoring the Georgian electricity market derives from the negative generation-consumption gap arising in the winter season. However, persistent electricity deficits over ten months between August 2018 and August 2019 suggest that the number of months characterized by a negative generation-consumption gap might be on the rise. Looking at Figure 1 below, generation can only clearly be seen to exceed consumption twice during the past 12 months, in May and June. This year has been the first time that Georgia has faced an e...
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Jun
28

An Assessment of the Electricity Market in Light of the “Gavrilov Effect”

The latest impact of Gavrilov’s visit to Georgia have fueled societal concerns about the economic consequences of deterioration in Russo-Georgian relations. For instance, due to the Russian government’s decision to cancel flights to Georgia, residents are beginning to worry about potentially adverse economic impacts to the tourism sector. ISET-PI has already discussed the expected impact of such a change, highlighting how these concerns might be unwarranted, as tourism account for 7.6% of the GDP, with Russian tourism contributing only 1.8% to the econom...
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Jun
24

How Can You Be Sure? On the Agricultural Insurance in Georgia

  BACKGROUND Agricultural production is associated with a variety of risks, including market, institutional, and production risks. An important production factor in agriculture is the weather. Its uncontrollable nature makes weather risk the prevailing risk to agricultural production. Farmers have various informal and formal means of transferring and mitigating these risks. Informal means include savings, diversification, off-farm activities, etc. The most common formal means of risk mitigation is insurance. Insurance is a contract that transfers th...
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May
31

A Persistent Negative Generation-Consumption Gap, a Puzzle to Be Explored

Looking at consumption and generation trends, it is evident that since August 2018 consumption typically exceeded generation. The negative generation-consumption gap also remained throughout April, amounting to 45 mln. kWh, with a total power generation of 966 mln. kWh and a consumption of 1,012 mln. kWh. Yet why has the generation-consumption gap remained negative since August 2018? Should we also expect the negative gap to persist over the following months? Figure 1. Generation-Consumption Gap A negative generation-consumption gap in April is a relati...
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